[via Anish] Guy Kawasaki interviews Bob Sutton:
Question: What does a company do when theres no evidence because its trying to create a market that doesnt exist yet?
Answer: Great question. There are two kinds of approaches. One is to look for a market that might want your product that doesnt have it yet. There is a Stanford grad, Brian Rikuda who started a hip-hop company called Conduit Entertainment. Brian got angel funding for it after the dotcom he was working at went bust. He figured out that there was no Little Rock, Arkansas sound, and it was a decent sized market, so he started there. It was successful because he had no competition and could start his own sound. Now its moved to a larger market.
Or you can do all sorts of little experiments. In fact, what it takes to test a market on the web and what is considered valid evidence has changed. John Lilly was CEO and founder of Reactivity, a company that did web design and incubated new companies during the dotcom boom. Its now an enterprise software company. Lilly recently explained how Reactivity generated ideas for new companies and why the approach they used would never work today. His team generated thirty ideas for new companies to pitch to venture capitalists in thirty days. Each of these prototypes was a PowerPoint deck.